Medtronic Profit Matches View, Settles Patent Dispute With Edwards Lifesciences

(RTTNews) - Medical equipment maker Medtronic Inc. (MDT) Tuesday said fourth-quarter profit declined from the prior year, hit by a hefty charge. Adjusted earnings matched estimates, while revenues were shy of expectations.

Separately, the firm said it has reached a global patent settlement agreement with Edwards Lifesciences Corp (EW). The agreement ends years of disputes between the companies related to TAVI patents.

The parties will dismiss all pending litigation matters and patent office actions between them, and grant each other broad releases to patent litigation claims.

Medtronic will pay Edwards a one-time payment of $750 million, and ongoing royalty payments through April 2022 based on a percentage of CoreValve sales, in payments of no less than $40 million every year.

In addition to settling the pending lawsuits with cross-licenses, Medtronic and Edwards have agreed that neither party would sue the other for patent matters anywhere in the world for eight years in the field of aortic and all other transcatheter heart valves.

EW, which closed up 0.5 percent at $86.48 on Monday, is up 3 percent in pre-market trading.

For the fourth quarter, Medtronic said its net earnings fell to $448 million or $0.44 per share from $969 million or $0.95 per share in the previous year.

The latest results included a one-time, non-cash $746 million pre-tax litigation charge, primarily related to the agreement reached with Edwards Lifesciences, as well as the company's INFUSE product liability settlement.

Adjusted earnings per share totaled $1.12, while it was $1.10 last year. On average, 21 analysts polled by Thomson Reuters expected earnings per share of $1.12 for the quarter. Analysts' estimates typically exclude one-time items.

Revenue was $4.566 billion, compared to $4.459 billion last year, and grew 3 percent on a constant currency basis. Analysts estimated revenues of $4.58 billion for the quarter.

Omar Ishrak, Medtronic chairman and chief executive officer, said, "In our fourth quarter, our overall organization once again delivered balanced growth, with strong performances in some areas more than offsetting challenges in other parts of our business."

The Cardiac and Vascular Group saw sales growth of 1 percent at $2.369 billion, amid growth in Structural Heart, Endovascular, and AF.

Sales improved 3 percent in the Restorative Therapies Group to $1.737 billion, driven by growth in Surgical Technologies and Neuromodulation, offset by declines in Spine.

Diabetes revenue jumped 13 percent to $460 million, due to strong performance from the ongoing U.S. launch of the MiniMed 530G with Enlite CGM sensor. This is the only system that automatically stops insulin delivery if glucose levels fall below a predetermined threshold.

Looking ahead to fiscal 2015, the company expects full-year revenue growth in the range of 3 to 5 percent on a constant currency basis and earnings per share in the range of $4.00 to $4.10.

The company reported revenue of $17.005 billion in 2014, up 4 percent on a constant currency basis.

Analysts look for earnings of $4.09 per share on revenues of $17.64 billion.

MDT closed fractionally lower at $60.34 on Monday.